Ferreting Out Work-injury Fraud

In Summer, Probes Of Compensation Claims Often Bear Most Fruit

When a Connecticut trucker whose aching back was too tender to drive an 18-wheeler could lead the pack around the track in his stock car, insurance-fraud investigators said: ``Gotcha!''

They also said it when a dock worker's knee hurt too much for him to do any heavy lifting, but was limber enough for him to win a 25- mile bicycle race wearing a dress.

FOR THE RECORD - Correction was published June 24, 1998 on Page A2.* The company that is now Travelers Property Casualty Corp. started an investigative unit to probe workers compensation fraud in the 1980s. The name of the company was incorrect in a story on Page 1, Tuesday.

And they said it again when a cop's bum back kept him off the beat but not off the stage, where he worked nights bumping and grinding in a G-string for tips as an exotic dancer.

Summer has arrived, and for those who investigate workers'- compensation fraud, it's prime time to hide behind the hedges with a video camera. Workers' compensation fraud -- a $7 billion-a-year ripoff nationally -- remains a year- round pursuit for many a malingerer. But investigators say warm weather can make it easier to separate the two-faced from the true-blue.

The reason: Frauds -- who in 1996 collected nearly 30 percent of all workers' compensation benefits -- are outdoors more.

``You can observe suspects more when they're outside. And there are more places [for investigators] to hide when they're [conducting] surveillance,'' said Richard Ciesluk, president of Beneficial Investigation Services Inc. in Milford, a specialist in such fraud cases.

Summer also lends itself to ``double-dipping'' -- collecting workers' compensation benefits while working for cash at odd jobs such as yard maintenance or home repairs, Ciesluk added.

Frauds often get away with it because faking a neck or lower-back injury is almost as easy as saying ``Ouch!''

``Fraud went way down for about four consecutive years. It's going back up a bit because the thieves are getting smarter,'' said John Hannon, an insurance-industry analyst with Ray Dirks & Co. in New York.

But insurers and industry regulators are catching up. ``This line of insurance was unprofitable for about 10 consecutive years. It's been profitable every year since 1993, because insurers started cracking down, and fraud is now a felony in about 35 states [including Connecticut],'' Hannon said.

The Hartford Financial Services Group and Travelers/Aetna Property Casualty Corp. started special investigative units in the 1980s. Others followed in the early 1990s, Hannon said.

States also have helped.

Connecticut, through the Chief State's Attorney's Office, launched a special fraud-detection unit in 1992. It has investigated 950 workers' compensation cases and obtained 83 convictions. The most serious offenders have served jail time.

More offenders are serving time because the tools to fight fraud are better than ever, insurers and investigators say. Centralized data bases make it easier to find people committing multiple frauds -- in many states, under different aliases. Workers, whose bonus pay is often tied to their group's performance, are less willing to turn a blind eye to co-workers illegally on the dole. And insurers say they no longer are willing to accept dishonest policyholders as a cost of doing business.

Two of the most commonly suspect claims are Monday-morning injuries with no witnesses and injuries at companies where massive layoffs are expected, said Andrew M. Foley, head of Travelers' claims operations in Hartford.

Though expensive upfront, fraud- fighting pays for itself in the long run, according to insurance industry research.

Since July 1993, the average workers' compensation insurance premium in Connecticut has fallen by nearly 40 percent. A reform bill passed by the state legislature is commonly cited for the year-by-year drop in premiums, although greater attention by employers to workplace safety and insurers' return-to- work strategies for people filing claims also win credit.

Fraud fighting also deserves some credit, said Chief State's Attorney John Whelan.

``We've made it clear that workers'-comp fraud is a crime. And we've made it clear that people will be punished if they are caught,'' Whelan said.

About eight out of 10 cases are investigated then dropped after a few phone calls. Cases investigated in greater depth are sometimes cracked by ``one really stupid move'' by the perpetrator, said Kimberly Perrelli, an assistant state's attorney.

The most famous blunders are captured on training films for insurance adjusters and other investigators.

``You're trying to catch people doing something they said they couldn't do when they filed the claim,'' said James Mitchell, vice president of Investigative Resources Global Inc. in Charlotte, N.C., whose clients are typically small insurance companies.

Videos have caught frauds who claimed to be paralyzed from the waist down riding bicycles; folks who claimed to have disabling back injuries lifting motor boats onto trailers; and the supposedly weak- kneed running in marathons, Perrelli said.

Sometimes, people faking the severity of an injury are caught because they are too succcessful in their non-work pursuits.